United States: Selected Issues
Author: International Monetary Fund
Publication Date:
15 Sep 1999
eISBN:
9781451839579
ISBN:
9781451839579
Language:
English
Keywords:
ISCR; CR; U.S. official development assistance; Phillips curve; dollar; price; outlay; DAC recipient; refugee assistance; contribution from the United States; decline in U.S. ODA; DAC country; Multilateral development institutions; Official development assistance; Development assistance
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This Selected Issues paper on the United States analyzes the measures of potential output, natural rate of unemployment, and capacity utilization. Traditionally, measures of resource utilization have been used as indicators for the potential build-up of inflation pressures, and hence as guides for the formulation of macroeconomic policy. The paper highlights that the most commonly used indicators of resource utilization in the United States are the output gap, the employment gap, and capacity utilization in industry. The paper also analyzes the wage and price determination and productivity trends in the United States.

Abstract

This Selected Issues paper on the United States analyzes the measures of potential output, natural rate of unemployment, and capacity utilization. Traditionally, measures of resource utilization have been used as indicators for the potential build-up of inflation pressures, and hence as guides for the formulation of macroeconomic policy. The paper highlights that the most commonly used indicators of resource utilization in the United States are the output gap, the employment gap, and capacity utilization in industry. The paper also analyzes the wage and price determination and productivity trends in the United States.

X. Official Development Assistance

1. The U.S. budget for development assistance is channeled mainly through the Agency for International Development (USADD), the Economic Support Fund (ESF), the multilateral development banks (MDBs), and food aid under Public Law 480. The USAID provides financial assistance to developing countries, mainly in the form of grants, to help complete projects related to agricultural development, population control, primary education, health, and the environment. The ESF makes financial assistance available to countries facing security risks, with a large share of these funds being provided to Israel and Egypt. In recent years, most of the contributions to the MDBs have been directed to the World Bank’s International Development Association (IDA), which provides concessional lending to the poorest nations. Title 1 of Public Law 480 provides concessional loans for the purchase of U.S. agricultural commodities, Title 2 provides food aid to both government and private organizations, and Title 3 provides food aid conditional on policy reforms.

2. U.S. foreign assistance outlays on a budgetary basis are expected to increase from $8.05 billion in FY 1998 (0.10 percent of GDP) to $8.66 billion in FY 1999 (0.10 percent of GDP) (Table 1). While funding for some categories of assistance (such as USAID, the Economic Support Fund, and MDBs) will likely decline in FY 1999, total assistance is expected to increase as a result of higher funding for Public Law 480. In FY 2000, the Administration has indicated that it will seek authorization to make contributions to the Heavily Indebted Poor Countries (HIPC) Trust Fund, which provides debt relief to severely indebted poor countries. The U.S. authorities believe that the HIPC Trust is underfunded and that a contribution from the United States would catalyze additional international support. Also, clearing U.S. arrears with the MDBs is a high priority of the Administration.

Table 1.

United States: Outlays for Foreign Assistance on a Budget Basis

(In billions of dollars)

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Source: U.S. Agency for International Development.

3. In its 1998 report, the OECD Development Assistance Committee (DAC) noted that U.S. official development assistance (ODA) declined by about $2.5 billion in 1997 to $6.9 billion (0.09 percent of GNP). The decline in US. ODA in 1997 was due, in part, to delays in the approval of the federal budget, as capital subscriptions to MDBs scheduled for 1997 were deferred to 1998. Also, the decline in U.S. ODA in 1997 reflected the removal of Israel from the list of DAC recipients; in 1996, Israel received $2.2 billion in payments that were classified as ODA. The United States was the second largest donor among DAC participants in 1997 in terms of the level of assistance, but it ranked last among DAC participants in terms of ODA as a percent of GNP (Table 2).

Table 2.

United States: ODA by DAC Countries in 1997

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Source: OECD/DAC 1998 Development Co-operation Report.

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Cover IMF Staff Country Reports
United States: Selected Issues
Author: International Monetary Fund
Volume/Issue:
Volume 1999: Issue 101
Publisher:
International Monetary Fund
ISBN:
9781451839579
ISSN:
1934-7685
Pages:
107
DOI:
https://doi.org/10.5089/9781451839579.002